9. Co-ownership Flashcards
(131 cards)
1
Q
What can the legal title (legal estate) be held as in co-ownership?
A
Only as joint tenants.
2
Q
What can the equitable title (beneficial interests) be held as in co-ownership?
A
As either joint tenants or tenants in common.
3
Q
Which piece of legislation governs the duties of the trustees and rights of beneficiaries?
A
TLATA 1996. Trustees have the same powers as an absolute owner due to this legislation.
4
Q
What is a joint tenancy?
A
Where all the joint tenants own the whole interest in the land, as though they form a single body and the body holds interest in the land. None of them have an individual share in the land, even if they contributed different amounts to the purchase price.
5
Q
If a property subject to a joint tenancy is sold, how much will each joint tenant receive?
A
Equal amounts, because of the maxim ‘equality is equity’.
6
Q
What are the four unities that must be present for a joint tenancy to exist?
A
Possession
Interest
Title
Time
(PITT)
7
Q
Explain one of the four unities for a joint tenancy to exist: Possession?
A
Each joint tenant is entitled to possession of every part of the land, none can identify one specific part of the land which they alone can possess. The joint tenants cannot ‘turn one of them out.’
8
Q
Explain one of the four unities for a joint tenancy to exist: Interest?
A
The interest of each joint tenant must be the same in extent, nature and duration.
They can receive equal shares of any rents or proceeds on sale.
They also are jointly responsible for rent if they are in a lease.
They must have equal duration of interest, e.g. life interest/fee simple won’t work.
9
Q
If one person has a life interest and the other a fee simple, can there be a joint tenancy?
A
No, because there must be equal duration of interest.
10
Q
Explain one of the four unities for a joint tenancy to exist: Title?
A
All the co-owners must acquire their title under the same document or by taking possession together if they claim title by adverse possession.
11
Q
Explain one of the four unities for a joint tenancy to exist: Time?
A
All the co-owners need to acquire their interest at the same time. E.g. ‘I leave my property to A, B and C’ can be a joint tenancy. But ‘I leave my property to A and to B when he attains the age of 21’ cannot be a joint tenancy as there is no unity of time.
12
Q
What is the right to survivorship?
A
When one of the joint tenants dies, the property is left to the surviving joint tenant(s). It does not pass under their will or under intestacy rules.
13
Q
What are the exceptions to the right of survivorship?
A
- If all joint tenants die together, but one survives by a matter of minutes, there will no longer be a joint tenancy and the survivor will hold the whole interest. Then, the property will pass under their will or according to the rules of intestacy.
- If all joint tenants die together, but it is uncertain who died first, it is presumed that death occurred in order of seniority according to s184 LPA 1925. The youngest joint tenant will be assumed to have died last and the property will pass under their will or according to the rules of intestacy.
- A joint tenant who kills a fellow joint tenant cannot take in equity by survivorship.
14
Q
If all joint tenants die together, but one survives by a matter of minutes, what will happen to the property?
A
If all joint tenants die together, but one survives by a matter of minutes, there will no longer be a joint tenancy and the survivor will hold the whole interest. Then, the property will pass under their will or according to the rules of intestacy.
15
Q
If all joint tenants die together, but it is uncertain who died first, what will happen to the property?
A
If all joint tenants die together, but it is uncertain who died first, it is presumed that death occurred in order of seniority according to s184 LPA 1925. The youngest joint tenant will be assumed to have died last and the property will pass under their will or according to the rules of intestacy.
16
Q
If a joint tenant kills a fellow joint tenant, what will happen?
A
A joint tenant who kills a fellow joint tenant cannot take in equity by survivorship.
17
Q
If a joint tenant dies, but they have not provided certain family members (define) with adequate financial provision, what will happen?
A
The Inheritance (Provision for Family and Dependants) Act 1975 provides that certain family members can challenge the right of survivorship if adequate financial provision is not made for them by the deceased. The family members include a widow or widower, a son or daughter, or anyone who was being directly supported financially by the deceased.
18
Q
What is a tenancy in common?
A
Where tenants in common have a specific share in the property, even if the shares are equal. The share stays ‘undivided’, so it is tied up in the property until it is sold.
19
Q
Which of the unities is required for tenants in common?
A
Only possession, the others can be present, but are not necessary.
20
Q
Does the right of survivorship exist in tenancies in common?
A
No, it does not. On the tenant in common’s death, their share will go via their will or via intestacy rules.
21
Q
When can tenants in common sell or mortgage their share?
A
Each tenant in common can sell or mortgage their own share at any time.
22
Q
When will the trustees holding the legal title change?
A
Only when someone retires from the trust or by virtue of the right of survivorship (if a trustee dies, the other trustees’ shares will get bigger).
23
Q
When will trustees in a tenancy in common change?
A
At any time when one of the tenants in common decides to sell their share, or dies.
24
Q
Which type of tenancy can be created at law?
A
Only joint tenancies, not a tenancy in common.
25
Why is the legal estate only able to be held by joint tenants?
It makes the disposition of property simpler, due to unity of title. All the buyer needs to see is one document of title and the death certificate of the trustee who has died.
26
What is the max amount of people that can hold legal title?
A max of four people can hold as joint tenants at law. If there is a sale to more than 4 people, the first four named on title (over 18 years old) will take to the exclusion of others.
27
How can tenancies be held in equity?
Either as joint tenants or tenants in common.
28
What is the max amount of people that can be co-owners in equity?
There is no limit on the number of co-owners in either joint tenancies or tenancies in common.
29
How old do co-owners need to be in equity?
They can be of any age, so property can be held on trust by trustees for children.
30
When deciding whether there is a joint tenancy or a tenancy in common, which one is presumed unless the contrary can be expressed or implied?
Joint tenancy, due to the maxim ‘equity follows the law’.
31
In equity, what will an expression of division of the property determine the tenancy as being?
A tenancy in common.
32
When the property is conveyed to the parties using words such as ‘equally’, ‘share and share alike’ or ‘amongst ourselves’, which tenancy will be created? What type of words are these?
These are words of severance, meaning the tenancy will be a tenancy in common.
33
What are the 5 presumptions that are looked at by the court when the parties have not expressed their intention as to how the property is held by the co-owners in equity?
The purchase of land in equal shares - JT
The purchase of land in unequal shares - TIC (or JT if purely domestic)
Partnership property - TIC
Money lent on mortgage - TIC
Premises held for several individual business purposes - TIC
34
What are the two different scenarios in the presumption of the purchase of land in unequal shares?
If two or more people purchase property in unequal shares and it is not for a family home or there isn’t a personal relationship between the parties = tenancy in common.
If in a purely domestic situation, two people buy property in unequal shares with no express declaration of tenancy, the presumption follows the law that the equitable title will be held as joint tenants, as it is more likely to reflect the parties’ intentions and commitments.
35
In a partnership property purchase, why is it presumed that they will hold land in a tenancy in common?
Because it is presumed the partners wish to have rights in monetary terms, according to their contribution. The right of survivorship also doesn’t seem suitable in these cases.
36
Why are mortgagees presumed to hold the land in a tenancy in common?
Mortgagees are presumed to hold their interests in the mortgage as tenants in common, because again, this is a business situation rather than one that would benefit from a right to survivorship. If the mortgagor fails to repay the loan and the mortgagees obtain the land, they hold it (beneficially) as tenants in common.
37
What is severance?
When a joint tenant chooses to leave the joint tenancy and is converted into a tenant in common.
38
Can there be a joint tenancy and a tenancy in common on one legal title?
Yes, if A, B, C and D are joint tenants in equity and A severs, only A will be a tenant in common. B, C and D remain joint tenants between themselves. Tenant in common A will hold a one-quarter share whilst the others will hold three-quarters of the equitable interest as joint tenants.
39
Can severance be done in law and equity?
No, severance can only be done in equity, as in law, there is only one type of tenancy - joint tenancy.
40
What does ‘severance can only be done inter vivos’ mean?
It means severance can only be done between living people. It cannot be done through a will, as the right of survivorship trumps the will/intestacy, due to the joint tenancy.
41
Who will the act of severance affect?
Only on the share of the party affecting the severance. The rest of the shares stay as joint tenancies.
42
How can the severance process be started?
By one joint tenant giving written notice to the other joint tenants - LPA 1925
OR
By any of the 3 methods that was effective for severing personal property (personalty), as shown in Williams v Hensman [1861].
43
What are the requirements of the written notice for severance?
1) Any form of written notice
2) Given to all other joint tenants
3) Show sufficient wish to affect IMMEDIATE severance - see Harris v Goddard [1983]
4) Does not have to be framed in terms of severance or say the word severance. - see Re Draper’s Conveyance [1969]
5) If delivered:
a) If sent by post in a registered letter or by recorded delivery and not returned to post office undelivered (s196(4) LPA 1925) - see Kinch v Bullard [1998]
b) If proved that the notice was left at last known home or business address of the joint tenants (s196(3) LPA 1925)
44
Explain the requirement ‘show sufficient wish to affect immediate severance’ in terms of Harris v Goddard [1983]?
In Harris v Goddard [1983], the wife, the joint tenant, petitioned for divorce and in her prayer of petition asked the court to make such an order as it thought just with respect to ownership of the family home. This did not affect severance. Unlike Re Draper, there was no sufficient immediate intention to receive a specific share, merely a request for the future.
45
Explain the requirement ‘Does not have to be framed in terms of severance or say the word severance’ in terms of Re Draper’s Conveyance [1969]?
Re Draper’s Conveyance [1969] a wife, who was a joint tenant of the family home, asked the court in divorce proceedings for an order for the sale of the property and division of the proceeds. This was held to constitute severance and the wife could not take the property under the right of survivorship, and therefore absolutely, on the husband’s subsequent death.
46
Explain the requirement ‘If sent by post in a registered letter or by recorded delivery and not returned to post office undelivered’ in terms of Kinch v Bullard [1998]?
In Kinch v Bullard [1998], the family home was owned by husband and wife as beneficial joint tenants. Following divorce proceedings, the wife sent to the husband, by ordinary first class post, a notice of severance. At about the time the letter was delivered by the postman, the husband fell ill and was admitted to hospital. The wife picked up the letter and destroyed it. The husband subsequently died and, if the notice of severance was effective, his estate would be entitled to a half share in the house. It was held that the requirements for service of the notice (contained in s196(3) LPA 1925) were satisfied by delivery at the husband’s address. It did not make any difference that the wife had intercepted it following delivery.
47
Which form is used to ensure a form A restriction is recorded on the proprietorship register as a result of severance by agreement between the co-owners? What is the normal form for this?
A SEV form. Otherwise, a Form A restriction will be registered by using the form RX1.
48
What are the 7 ways a joint tenant can destroy one of the four unities?
Sale
Contract to sell
Fraudulent ‘sale’
Mortgage
Merger
Homicide
Bankruptcy
49
How can a sale destroy one of the four unities that are required for a joint tenancy?
If the joint tenant sells their beneficial interest, the buyer gains an interest from a separate act or document from the original joint tenants. Unity of title is therefore destroyed and severance occurs. The buyer will hold their interest as a tenant in common. The joint tenant must meet the requirements of s53(1)(c) LPA 1925 when selling their beneficial interest (i.e. in writing and by beneficial owner).
50
How can a contract to sell destroy one of the four unities that are required for a joint tenancy?
As “equity looks on that as done which ought to be done”, a contract to sell a beneficial interest is treated, in equity, as having the same effect as an actual sale. Unity of title is once more destroyed. The contract must meet the requirements of s2 Law of Property (Miscellaneous Provisions) Act 1989.
51
How can a fraudulent ‘sale’ of the whole property by one joint tenant destroy one of the four unities that are required for a joint tenancy?
If one joint tenant purports to sell the co-owned property by fraudulently forging their fellow joint tenants’ signatures on the conveyancing documents, the effect is not to pass full legal title to the buyer but to sever the forger’s equitable interest, which will then pass to the buyer.
52
How can a mortgage (or a fraudulent mortgage) taken out by a joint tenant on their share destroy one of the four unities that are required for a joint tenancy?
If a joint tenant mortgages their equitable interest, unity of title is once more destroyed and severance occurs. A fraudulent mortgage of the whole property seems to have the same effect. The joint tenant must meet the conditions in s53(1)(c) LPA 1925 when mortgaging their equitable interest.
53
How can a merger of interests destroy one of the four unities that are required for a joint tenancy?
If one joint tenant who holds a limited interest obtains a remainder interest, they will no longer have an interest in land of the same duration as the other joint tenants. Unity of interest is therefore destroyed. For example, if A, B and C are originally joint tenants for life and D has a fee simple in remainder, and if C were to buy D’s interest, the two interests of C would merge. C becomes a tenant in common, whilst A and B remain joint tenants for life.
54
How can a homicide committed by a joint tenant of a joint tenant destroy one of the four unities that are required for a joint tenancy?
A joint tenant who kills their fellow joint tenant cannot take under survivorship. It is said that homicide is a severing event, although this is unlikely. Severance must occur inter vivos. It is more likely that homicide is an exception to the normal rules of survivorship, which is accepted on the grounds of public policy.
55
How can the bankruptcy of a joint tenant of a joint tenant destroy one of the four unities that are required for a joint tenancy?
If a joint tenant becomes bankrupt the unity of title is destroyed and severance occurs on the making of the bankruptcy order (Re Pavlou [1993]). A trustee in bankruptcy may apply for sale of the co-owned property on the joint tenant’s behalf. On sale, the bankrupt’s creditors will be entitled only to the bankrupt’s share of the proceeds.
56
How can severance occur through mutual agreement?
If all joint tenants agree that severance should occur, even if the legal formalities of written notice and destruction of one of the four unities has not happened, the mutual agreement will allow severance to happen.
57
Explain severance through mutual agreement using Burgess v Rawnsley [1975]?
in Burgess v Rawnsley [1975], a widow, Mrs Rawnsley, and widower, Mr Honick, bought a flat together in which to cohabit as joint tenants at law and in equity. The relationship broke down and an oral agreement was reached whereby Mr Honick would buy Mrs Rawnsley out. Before this was put in writing, Mr Honick died. It was held by the Court of Appeal that severance had occurred. There was no destruction of unity of title, as the contract to sell was unenforceable for lack of writing. There was, however, an agreement between both joint tenants showing an intention to sever. Mr Honick’s estate therefore inherited a half share of the flat in equity.
58
How can severance occur through mutual course of dealing?
If one party makes clear to the other that they wish that their shares should no longer be held as joint tenants, but to be held as tenants in common. This is one of the hardest to prove, e.g. where a house was converted into separate parts, this was deemed to be from convenience and doesn’t count as severance. Also, where the proceeds from a business were put in separate names, this was deemed to be for business reasons and didn’t count as severance.
59
A, B, C, D and E purchase Meadowlands together as legal and beneficial joint tenants. A, B, C and D are the legal title joint tenants. Why?
Because there can only be four joint tenants on a legal title.
60
A, B, C, D and E purchase Meadowlands together as legal and beneficial joint tenants. A serves written notice under s36(2) LPA 1925 on B, C, D and E that they want to be a joint tenant in common. What is the breakdown of shares now?
B, C, D and E hold ⅘ of the property as joint tenants. A holds ⅕ of the property as a tenant in common.
61
A, B, C, D and E purchase Meadowlands together as legal and beneficial joint tenants. B tells A, C, D and E that they have left their interest in their will to Z. What is the breakdown of the beneficial shares now?
No change from how they were - joint tenants have the right of survivorship that takes precedence over a will or intestacy rules.
62
A, B, C, D and E purchase Meadowlands together as legal and beneficial joint tenants. C sells their interest in Meadowlands to X. What is the breakdown of both legal and beneficial shares now?
A, B, C, D = legal title (E can’t be there because there are already 4)
A, B, D, E = beneficial title: joint tenants holding ⅘ of the property
X = tenant in common holding ⅕ of the property
63
A, B, C, D and E purchase Meadowlands together as legal and beneficial joint tenants. D sells his share to Y and then B dies. What is the breakdown of the legal and beneficial shares now?
A, C, D = legal title (you cannot sever a legal joint tenancy)
A, C, E = beneficial title: joint tenants holding ⅘ of the property
Y = beneficial title holding ⅕ of the property
64
What are the three ways of terminating co-ownership?
Sale
Partition
Union in a sole owner
65
How can a sale terminate co-ownership?
If the trustees of the legal estate sell the property to X, then the co-ownership will come to an end as X is now the sole owner. THe trustees will then distribute the proceeds to the beneficiaries.
66
What is a partition?
Partition is where the property is physically divided, so to not allow a co-owner to be in possession, ultimately destroying the unity of possession.
67
How can a partition terminate co-ownership?
When a property is physically partitioned to not allow a co-owner to possess the land, that destroys the unity of possession. There is then no co-ownership at all (no JT or TIC), as all co-ownership requires the unity of possession.
68
What if the co-owners do not agree with the partition of the land?
By s7 TLATA 1996, the trustees may, with the consent of all the beneficial tenants in common who must be absolutely entitled and of full age, partition the property. If any person objects to partition, a court order may be sought under ss14 and 15 and the court may make such an order as it thinks fit.
69
How can a union in a sole owner terminate co-ownership?
In one of 3 ways:
1. Beneficial co-owners transfer their interests to one person who is of full age, that person can require the trustee’s to convey the legal estate to them.
2. If held as tenants in common, the other beneficial co-owners transfer their interest to one person on their death, that person will become a sole owner and co-ownership will terminate.
3. If held as joint tenants, the other beneficial co-owners die and the remaining joint tenant will become the sole owner and co-ownership will terminate.
70
What does the Law of Property (Joint Tenants) Act 1964 provide?
It provides that the survivor of two or more joint tenants shall be deemed to hold the sole beneficial interest in the legal estate if it is shown that they are solely and beneficially interested. This means the survivor can convey a good title to the buyer without needing to appoint a second trustee. There are some exceptions.
71
What are the exceptions to the LP(JT)A 1964?
1) If a memorandum of severance has been endorsed on or annexed to the conveyance.
2) If the property is registered. If so, then the notice of severance should be registered.
3) If there is a bankruptcy order registered against any of the joint tenants in the land charges register (this severs the joint tenant’s equitable interest).
72
What does a buyer have to do to make sure they can buy from a survivor joint tenant?
Make sure the house is unregistered.
The house was originally conveyed to the sellers as joint tenants.
That the deceased joint tenant is deceased, by looking at the death certificate.
That there is no memorandum of severance endorsed on the original conveyance.
That there are no bankruptcy entries on either joint tenant registered.
That the conveyance to the buyer contains a statement by the survivor that they are solely and beneficially interested.
73
What kind of trust is claimed for when there is a sole legal owner but co-ownership is implied in equity? E.g. the house is transferred into B’s sole name, but A claims that she is entitled to a share in the house.
Either a resulting or a constructive trust.
74
What is a resulting trust?
A resulting trust results by implication from the way the parties have behaved, so a presumed intention that is given effect.
75
What is a constructive trust?
A constructive trust is constructed and imposed by the courts where there has been a common intention between the parties, whether that is an express common intention or an implied common intention, that the party not on the legal title is to have an interest in the house and this common intention has not been honoured.
76
What are the two issues that arise from a resulting or constructive trust?
Qualification (if they should be awarded an interest) and quantification (how much).
The first issue is the qualification issue, which is where the court establishes whether A should be awarded a beneficial interest in the property in the first place under either a resulting or constructive trust. If A qualifies for an interest, the second issue is one of quantification of that beneficial interest.
77
Which of the resulting and constructive trusts apply more in domestic situations and which are commercial situations?
Domestic: Constructive trusts (common intention)
Commercial: Resulting trusts (behaviour)
78
What does it mean to say that s53(2) LPA 1925 exempt resulting and constructive trusts from the written requirements of s53(1)(b) LPA 1925?
s53(1)(b) LPA 1925 prescribes the formalities for the creation of an express trust of land. A declaration of trust respecting any land…must be manifested and proved by some writing and signed by some person who is able to declare such trust or by his will. The declaration of trust itself does not have to be in writing but its creation has to be evidenced in writing and signed by the person able to declare the trust or by their will. Thanks to s53(2), resulting, implied and constructive trusts may be created purely orally.
79
How can a resulting trust arise?
When a legal estate is held in the name of one person, but some/all of the purchase money for the property was provided by someone who was not on the legal title. (Classic, but no longer relevant domestic situation is if H buys property with contribution from W, but H is only one of legal title).
80
What could rebut a presumption that a resulting trust arises?
Either by showing that the contribution was a gift, or by using the presumption of advancement.
81
What is advancement in terms of resulting trusts?
When property is purchased by a ‘provider’ e.g. a husband or parent and put in to the name of the wife/child. It would be seen as a gift to the wife/child and the presumption of a resulting trust in favour of the provider is rebutted.
82
Is advancement still a useful rebuttal to resulting trusts?
It is really out of date, but still was used in 2019. When s199 Equality Act 2010 comes into force, it will extinguish the presumption of advancement.
83
What will be taken into account as contributions in terms of a resulting trust?
YES: Contributions to the deposit BEFORE the property is acquired.
MAYBE: Contributions to the mortgage payments as ‘delayed payments’ after purchase.
MAYBE: Contributions to purchase, maintenance and outgoings, e.g. utility bills.
NO: Moving expenses, payments after purchase.
84
If the qualification of a resulting trust was recognised, what was the way to work out quantification?
Using a strict mathematical approach - hence why this is now used mainly for business, not domestic situations. The parties would take their percentage share based on what they contributed to the purchase price of the property and mortgage repayments if they are recognised. E.g. £100K warehouse in A’s name, £70K from A, £30K from B, A = 70% share, B = 30% share.
85
Why is the resulting trust not used in domestic situations anymore?
Because it didn’t lend itself to a fair division of value in the context of the family home. Therefore a constructive trust is now used.
86
What is the role of intention in both a resulting and a constructive trust?
Resulting trust: Operates as a presumed intention of the contributing party in the absence of actual intention.
Constructive: Common intention of both parties (either actual or implied) is crucial.
87
In a constructive trust, what kind of intention is important?
The common intention of both parties to share a beneficial interest in the property, through words or conduct.
88
Does the size of the beneficial share need to be shown to have common intention?
No, the only aspect of common intention that didn’t have to be communicated was in relation to the size of the beneficial share.
89
What are the two types of constructive trust?
Express agreement constructive trust - express agreement
Implied agreement constructive trust - implied from conduct of parties
90
What must the party claiming an interest need to show, in both the express and implied agreement constructive trusts?
They must prove that they have acted to their detriment in reliance on the intention.
91
Would a conversation about a common intention to share the beneficial interest in a property count as grounds for a constructive trust?
Yes, the conversation doesn’t have to be precise or perfectly remembered, but some agreement or understanding about a shared ownership will bring a trust into being. See Eves v Eves [1975]
92
Illustrate how an express agreement constructive trust may arise by using Eves v Eves [1975]?
In Eves v Eves [1975], an express common intention was found. The case concerned an unmarried couple where the conveyance of a house was taken in the man’s name only. At the time of the purchase, he told the woman that, had she been 21 years old, he would have put the house in both their names, because it was their joint home. The words by the man were seen as evidence of an express common intention that the woman was to have an interest in the house and the only reason she was not on the conveyance was because of her age.
93
When discussing the detriment taken on by the would-be beneficial owner, what kind of detriment could this be?
In Eves v Eves, the woman carried out heavy construction work on the house. In another case, the woman brought up the children and had contributed to the finances. Detriment to the joint lives of the parties will suffice, and the detriment does not need to be a direct contribution to ‘bricks and mortar’.
94
If there had been an express common intention constructive trust, do the parties need to decide the actual detriment when the agreement is made?
No, the detriment just has to act ‘to his detriment’ in reliance on the agreement in order to establish a constructive trust - Lloyd Bank v Rosset [1990].
95
What is the qualification issue in an express agreement constructive trust?
Whether the claimant is deserving (due to an express agreement) of a beneficial interest in the property.
96
What is the qualification issue in an implied agreement constructive trust?
What conduct can be taken into account from which to infer an implied agreement.
97
Illustrate implied agreement constructive trusts with reference to Gissing v Gissing [1971]?
The House of Lords in Gissing v Gissing [1971] held that indirect financial contributions by a wife over a period of 25 years did not show this common intention. Her contributions took the form of general household expenditure. Their Lordships held that this did not give rise to a constructive trust as, in the absence of an express common intention, “contributions” must be clearly referable to the acquisition of the property – for example, to the deposit or the mortgage instalments – or else it must be shown that the contributions to the household expenditure by the non-legal owner allowed the legal owner to pay the mortgage. However, this last point about allowing the legal owner to pay the mortgage was rejected in Lloyds Bank v Rosset.
98
What would count as contributions allowing the creation of an implied constructive trust?
Only contributions to the purchase price either initially or by contribution to the mortgage payments would justify the creation of an implied agreement constructive trust. Also, being involved in a creation of a mortgage and jointly responsible for all money and liabilities can be accepted (Hyett v Stanley [2004]). However, nowadays a wider approach is taken by the courts.
99
Can a wife decorating and renovating a house be taken as a contribution for an implied agreement constructive trust?
No, see Lloyds Bank v Rosset [1990], where the wife supervised builders and carried out much of the decorating in the renovation of a derelict farmhouse which was eventually intended as the family home. It was held that there was nothing in this indirect contribution which could show a common intention between the parties for the wife to have an interest in the property. However, nowadays the courts are taking a wider approach to this.
100
What was said in obiter in Stack v Dowden [2007] that changed the way the courts looked at implied agreement constructive trusts?
The obiter mentioned that the whole course of conduct could include both financial factors and the nature of the parties’ relationship, so casting a wider net for contributions resulting in constructive trusts. Lloyds Bank v Rosset has not been disapproved, but the obiter dicta in Stack v Dowden as approved obiter in Jones v Kernott appear to have opened the door for wider conduct to be now taken into account. Note also that the courts do appear to be looking at the wider conduct of the parties today.
101
What is the difference between inferring and imputing an intention?
“Inferring” an intention is trying to establish what the parties wanted their shares to be by looking at their words and conduct. “Imputing” an intention means that the court deems the parties to have such an intention even though such an intention cannot be found from their words or conduct and even though the parties might have had no such intention.
102
Can the courts impute an intention that the person not on the legal title should have a beneficial interest in the property?
No, the Court of Appeal held that imputing an agreement or a common intention was not possible. This was confirmed in 2015. However, the quantitative issue can be imputed.
103
How do the courts quantify the beneficial share in an express agreement constructive trust?
Where the parties have discussed the share, the courts will try to award the share that was agreed between the parties. If not, the court will try to impute an intention to them based on fairness from the point of view of a just and reasonable person.
104
Explain the position taken in Oxley v Hiscock [2004] on imputing an intention?
In Oxley v Hiscock [2004], Chadwick LJ stated that the approach to be taken when there had been no discussion about the parties’ shares was that the court should look at the course of dealings between the parties including any arrangements in respect of the outgoings for the house – for example, mortgage payments, council tax, utilities, repairs, insurance and housekeeping – and award the share which the court thought was fair having regard to the whole course of dealing between the parties.
105
How was Stack v Dowden [2007] different from the position taken in Oxley v Hiscock [2004]?
In Stack, the court said that the search was to ascertain the parties’ shared intentions with respect to the property in the light of their whole course of conduct in relation to it. This was a rejection of the fairness approach in Oxley v Hiscock. In Oxley v Hiscock, the court was imputing an intention whereas in Stack v Dowden the court was inferring an intention.
106
What did Jones v Kernott [2011] confirm about how the courts could solve the quantification issue in express agreement constructive trusts.
In Jones v Kernott, it was said that if the common intention as to each party’s beneficial share was not expressly stated, the court would infer what the parties intended by looking at their words and conduct, taking into account the factors that had been given in Stack v Dowden [2007].
107
How do courts quantify the beneficial share in an implied agreement constructive trust?
The court will look at the words and conduct of the parties taking into account the factors given in Stack v Dowden and try to infer what shares the parties intended. If it is not possible to infer this intention, the court will impute an intention to the parties based on what is fair in light of the whole course of dealing between them as regards the property.
108
Where quantifying the beneficial share in an implied agreement constructive trust, what kind of contributions are accepted?
The emphasis is on the conduct of the parties in relation to the property.
109
If a constructive trust is successfully argued, what share can be awarded?
A 50:50 share could be awarded if a constructive trust was successfully argued.
110
If both parties are on the legal title, but the extent of the beneficial share has not been determined, what kind of issue is this?
A quantitative issue.
111
Explain the result in Stack v Dowden [2007] and why it was unusual that a constructive trust was created?
Stack v Dowden [2007] concerned the purchase of a house by unmarried cohabitees. The purchase price of £190,000 came from a mortgage for £65,000 for which both Mr Stack and Ms Dowden were liable, two endowment policies, one in joint names and one in Ms Dowden’s name, with the remainder of the purchase price coming from Ms Dowden’s savings and the sale of a property registered in her name. Mr Stack and Ms Dowden were both registered as proprietors, but there was no declaration on HMLR form as to how the beneficial interest was held. The House of Lords held that there was a presumption of a beneficial joint tenancy on the basis that equity followed the law unless the contrary was proved, so a 50:50 split.
Ms Dowden was able to prove a contrary intention to equal shares in that she had contributed far more to the purchase price, and the finances of the couple had been kept strictly separate. There could not have been many unmarried couples who had lived together for so long and had children together who kept their affairs as rigidly separate as they did. She was awarded a 65 per cent share of the house.
112
What would someone need to prove to rebut the presumption of a beneficial joint tenancy, meaning 50/50 split in a co-ownership situation where both names are on the legal title without any defined beneficial shares?
That the parties intended a different share from 50/50 split when the house was purchased; or
Later in the relationship they formed a common intention that the shares would change. See Jones v Kernott [2011].
113
Explain what kind of analysis should be used for quantifying an interest when both parties are on the legal title and there is no declaration of the beneficial interest? Use Jones v Kernott [2011] and constructive/domestic trusts?
Jones v Kernott looked at quantifying interests under a constructive trust when both parties are on the legal title and there is no declaration of the beneficial interest. The same analysis for quantifying an interest in this case should be used when quantifying the interest under a constructive trust when one party only is on the legal title.
114
Jones v Kernott [2011] case outline:
Jones v Kernott [2011] is a Supreme Court case. A couple had lived together from 1985 in a house that had been purchased in joint names but with no declaration of the beneficial interest. In 1993, Mr Kernott had moved out and had stopped contributing to the mortgage repayments and the other outgoings on the house. Until then there had been no question that the beneficial interest was 50:50. The question was in what shares the court should apportion the beneficial interest given Mr Kernott had moved out in 1993 and had stopped contributing to the property.
It was decided that where a house has been bought in joint names by a couple, married or unmarried, and both are responsible for the mortgage and there is no declaration of the beneficial interest, the constructive trust analysis will be used. The legal title will be held as a joint tenancy. The starting point on the equitable title would be a joint tenancy because the purchase of the property was an “emotional and economic commitment to a joint enterprise” and because of the difficulty of establishing the relative contributions to the property over a long period of time. In the event of a relationship breakdown, the presumption would be a 50:50 split of the financial proceeds of the house. This presumption could be displaced by showing either:
- the parties intended a different share from 50:50 when the house was purchased; or
- later in the relationship they formed a common intention that the shares would change.
The fact that the couple had cashed in an insurance policy in 1995 which enabled Mr Kernott to purchase his own house allowed the court to infer that his share in the house crystallised at this time and, on this basis, the court restored the order of the County Court Judge of a 90 per cent share to Ms Jones and a 10 per cent share to Mr Kernott.
115
Explain what kind of analysis should be used in a commercial scenario for quantifying an interest when both parties are on the legal title and there is no declaration of the beneficial interest?
The resulting trust principles should be used in an investment or commercial scenario, because in a business or commercial situation, parties do not expect their rights to be determined by the courts looking back at their words and conduct over the period of their relationship; imputing intentions that they never had but which the court considers they would have had if they had thought about it – which is what happens in a constructive trust.
116
What is the nature of the beneficial interest in a constructive or resulting trust?
The interest will arise behind a trust of land, as it is a trust including land under s1 TLATA 1996.
117
Are interests arising under a constructive or resulting trust equitable or legal?
They are equitable.
118
Why must interests arising under a constructive or resulting trust be protected?
In order to bind third parties.
119
How are interests arising under a constructive or resulting trust protected in unregistered land?
Interests arising under constructive or resulting trusts or estoppel are not registrable as land charges. They are overreaching, so the legal owner must appoint a second trustee to overreach them. If they do not, the interests are still subject to the doctrine of notice - which is usually occupation.
120
How are interests arising under a constructive or resulting trust protected in registered land?
Where an equitable interest is proved, it is an interest which must be protected by the entry of a restriction. If it is not so entered and the holder of the interest is in actual occupation, it will be an interest capable of being overriding.
121
Distinguish the meaning of ‘occupation’ in registered and unregistered land?
In registered land, its only function is to convert the unprotected interest into an interest capable of being overriding. In unregistered land, it is necessary to fix the buyer with notice.
122
Which benefits do lawful spouses have that couples that are simply cohabiting do not?
s37 Matrimonial Proceedings and Property Act 1970 (MPPA 1970)
The Matrimonial Causes Act 1973 (MCA 1973)
123
Explain s37 Matrimonial Proceedings and Property Act 1970 (MPPA 1970)?
s37 Matrimonial Proceedings and Property Act 1970 (MPPA 1970) - a spouse who makes a substantial contribution (monetarily or not) to the improvement of the property (whether either or both have a beneficial interest) will be treated as having a share or an enlarged share in that beneficial interest by virtue of his or her contribution, subject to any agreement between them to the contrary express or implied.
124
Explain The Matrimonial Causes Act 1973 (MCA 1973)?
The Matrimonial Causes Act 1973 (MCA 1973) provides the court with wide discretionary powers to order a distribution of the spouses’ property. MCA 1973, however, comes into play only where the marriage breaks down and there is a divorce, judicial separation or nullity. In exercising its discretion the court must have regard to the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contributions made by looking after the home or caring for the family (s25(2)). Thus, under s25(2), ‘contributions’ has a much wider meaning than for the purpose of constructive trusts. Under MCA 1973, the court must give consideration to the welfare of any minor child of the family when exercising its discretion.
125
How can spouses protect their home rights under ss30-32 Family Law Act 1996?
By way of Class F land charge in unregistered land, or entry of notice in registered land.
126
Which piece of legislation extended the protection afforded to married couples to couples in same-sex relationships?
Civil Partnership Act 2004 - In the event of the dissolution of a civil partnership, s66 provides that either civil partner may apply to the court for a declaration as to the title or apply for an order for the possession of the family home. The court is entitled to make such order in respect of the property as it thinks fit, including an order for sale. CPA 2004 recognises contributions to the improvement of the property if substantial and in money or money’s worth (s65).
127
What does ss14 and 15 TLATA 1996 provide for?
They cover disputes as to sale.
128
What is the main point of s14 TLATA 1996?
Under s14 TLATA 1996, anyone who has an interest in property subject to a trust of land may apply to the court for an order for sale. Whether an order for sale will be granted depends on the circumstances of the case.
129
Outline s14 TLATA 1996 and what it covers regarding disputes as to sale?
S14: any person with an interest in the trust can make an application to the court for sale. This can occur when a beneficiary wants to sell, but the legal trustees do not wish to sell. The court will use the factors in s15 to determine what will happen. In addition, the court can make a declaration as to the beneficial interest of any interested party. This could occur where Albert alone is on the legal title and Jemima, his cohabitee, wants the court to declare that she has a 50 per cent beneficial interest in the house, for example.
130
Outline s15 TLATA 1996 and what it covers regarding disputes as to sale?
S15: lays down guidelines as to matters taken into account by the courts in deciding whether or not to direct that a power should be exercised. These include:
the intentions of the settlor;
the purpose of the trust;
the welfare of any children who are in occupation of the land; and
the interest of any secured creditor.
The courts are not restricted by the criteria or guidelines in s15 and can depart from them.
131
If a beneficiary under a trust of land is adjudicated bankrupt, the provisions of which Act will determine the outcome?
The Insolvency Act 1986 will determine the outcome, not the Trusts of Land and Appointment of Trustees Act 1996.
